Why We Do It
In our experience, most people have no idea how poorly their estate plans will actually work. The real tragedy is that most problems don't arise until after it's too late to fix them. We have a passion for educating people about the pitfalls of traditional estate planning and helping them navigate the many estate planning challenges presented by our increasingly tax and legal landscape.
There are many areas where estate plans fail. Some of the more common failures include:
Probates happen, MORE OFTEN THAN NOT, even where you created a living trust with the specific objective of avoiding probate.
Unintended heirs receive property that should have gone to someone else.
Estate taxes are imposed after the death of a surviving spouse, where a married couple's combined estate should have been completely sheltered.
After the cognitive disability of a parent, adult children fail to manage assets properly because there are no guidelines. Sometimes siblings just get mad at each other. Sometimes they sue!
Retirement accounts pass to the estate of the deceased, or "wrong" beneficiaries where income taxes must then be paid all at once, rather than be deferred for many years.
Poorly managed life insurance policies terminate before the death of the insured, causing huge financial losses.
Your minor children get an outright inheritance, which may result in a court ordered guardianship.
Disabled beneficiaries receive their inheritance the wrong way, causing loss of valuable government benefits.
The above list represents just SOME of the possible problems, several of which could be happening at once.
The Shifting Estate Planning Paradigm
THE TRADITIONAL HOLOGRAPHIC WILL
Leaving instructions for the disposition one's property at death is not a new concept. A will in some form dates back to the Old Testament and the Roman Empire.
Two hundred years ago in America, the creation of a will was a deeply personal exercise. (See, for example, George Washington's Will).
Older versions of wills often read like a lengthy personal letter. Written in the first person, the heirs would "hear" the maker's words one last time. In addition to passing possessions and real property, people explained their purposes, their hopes, their wisdom, and their memories related to various gifts. The "last will and testament" said something about the person, his relationships, and the nature of the property.
As law and property ownership became increasingly complex, so too did the requirements for planning one's estate disposition. As the legal technicalities mounted, it became more commonplace (and necessary) for an attorney to oversee the creation of a document. In large part, this was a good thing, as it made it more likely that what the individual intended actually occurred. We have seen some bequests fail because legal wording was used in the wrong context.
This legal proficiency did come at a price. The more legally technical and lawyer-drafted the documents became, the less the document represented the individual's values and his or her unique life story and "testament."
Attorney-drafted documents inevitably led to greater standardization for the terms used in wills and trusts. As more attorneys realized they would and could rely on a standard language, the result was the creation of forms. The forms allowed attorneys to quickly prepare documents for clients without creativity and without "reinventing the wheel" each time an estate plan was prepared.
This further diminished the personal voice within the document. The standard measurement of the form is that if you removed the first and last pages of the document, where the person's name and signature space were likely present, the "middle" of one person's document would be indistinguishable from another's.
WORD PROCESSORS, "ONE-SIZE-FITS-ALL" AND THE TRUST MILL
With the introduction of personal computers and word processing programs, creation of wills and trusts became even easier for attorneys. A form trust could be quickly and efficiently created, allowing attorneys to draft documents in less time.
The good news about the introduction of computers is that wills and trusts can be customized to include more possibilities and cover more contingencies on a cost effective basis.
The bad news is that it allowed attorneys now rely on "one-size-fits-all" forms to minimize their drafting time and increase their profitability. In this manner the client's "voice" whicht was once heard very clearly in holographic wills is completely lost. Additionally, trying to fit all clients into the same form is not realistic, as no two families have the same goals and objectives - the same values to pass on to the next generation. Nor does it easily lend to a discussion of gifts to charity.
For example, when planning for the distribution of assets to minor children, attorneys typically recommend that an inheritance trust should be created. Such a trust will dole the assets out over some period of time after the age of majority.The form book example of this concept is to give the children "1/3 at age 25; 1/3 at age 30 and 1/3 at age 35."
We find it hard to believe that every single client that walks into an attorney's office comes in with this exact distribution schedule in mind. Yet the vast majority of the documents we review utilize this method word for word. Who's to say that every child is ready to a sum of money - no matter what the amount - at these ages? What is so magical about three distributions, separated by precisely five years?
The widespread availability of forms has also led to the "selling" of living trusts by non-attorneys. The businesses offering such documents are often referred to as "Trust Mills." Trust Mills are usually not focused on helping people create estate plan documents. Rather, they are trying to gather sufficient financial information to sell something.
The California Department of Justice says this: Companies advertising "living trusts" sometimes misrepresent the advantages of living trusts. But the most serious problem is the misuse of the financial information sales persons obtain to prepare a living trust. Unfortunately, this information is used to sell unneeded annuities and various investments, most often to senior citizens.
DESIGNING THE DOCUMENT TO MEET THE CLIENTS' SPECIFIC NEEDS
At Wright & Wright, we believe there is a way to create estate plans that capture the benefits of advanced word processing without sacrificing personal service. Instead of trying to shoe-horn every client into the identical forms, we use the forms as a starting point for customization. We believe that's what estate planning attorneys are equipped to do.
We start with a word processing capability that allows us to efficiently create a well customized set of documents for each client, based on a detailed interview and discussion of particular family dynamics and personal preferences. Then, we further customize these documents to add specific guidelines and instructions that are unique to each client family. The result is an estate plan that captures the voice of the client and is truly custom tailored to their situation.
Ironically, the cost of such documents is sometimes actually LESS than you may pay for a Trust Mill trust! If you are an individual who sees value in a great deal of customization, the price is marginally higher but the result is beyond comparison.
We do what we do because we believe that people who have spent a lifetime growing their investments and saving - no matter how great or small - deserve more than a cookie-cutter form. They want a relationship with experienced legal counsel who will help them effectively control and protect their assets as they pass down the generations.
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